Hot topics in payroll 2011

Diana Bruce, policy liaison officer for the Chartered Institute of Payroll Professionals (CIPP), provides a roundup of payroll issues from the last month.

Business Record Checks

HMRC is planning a programme of Business Records Checks to check the adequacy and accuracy of business records within the small and medium enterprise (SME) sector and are consulting on how best to implement such a programme. No new legislation is proposed; the programme will use existing law regarding both record keeping requirements and penalties for failure to comply with those requirements, with penalties being imposed for significant record keeping failures. Record keeping requirements were updated in Finance Act 2008 and guidance is continuing to be updated. Record keeping penalties will be considered as part of a separate review into HMRC’s regulatory & specialist penalties.

Security for PAYE and National Insurance Contributions

This consultation looks at how HMRC can tackle the small minority of employers who are determined rule breakers and who could pay the PAYE and NICs that they owe but have chosen not to do so. It seeks views on a proposal for HMRC to take a power to require security in respect of PAYE and NICs liabilities, backed up by a criminal sanction for non-compliance. It looks at the role security could play in preventing losses to the exchequer as well removing the competitive advantage gained by those determined not to pay. HMRC is committed to helping those who want to pay on time. This proposal would not affect the arrangements that exist to assist those who need time to pay.

HMRC estimates that the Exchequer lost between £600 million to £800 million per year between 2005-06 and 2008-09 in PAYE and NICs debts that had been built up by employers who then became insolvent. This is money that had been deducted from employees’ pay, but was not subsequently paid to HMRC.

This consultation examines extending the current powers to seek security for VAT and excise duties to PAYE and NICs. It does not cover extending a requirement for security to income tax within the scope of self assessment, corporation tax or to inheritance tax, stamp duty land tax etc. Indirect taxes are also outside the scope of this consultation.

National minimum wage enforcement: Naming employers who flout the law

A policy has been publishedthat sets out how the scheme to name employers who flout National Minimum Wage (NMW) law will operate, and the criteria for naming employers that came into force on 1 January 2011.